Nurses Registry agrees to $16 million judgment in federal health-care fraud case

Lennie and Vicki House owned Lexington-based Nurses Registry. Lennie House died in February, and the company filed for bankruptcy in June.
Lennie and Vicki House owned Lexington-based Nurses Registry. Lennie House died in February, and the company filed for bankruptcy in June.

Nurses Registry and Home Health Corp. and the estate of its former owner, Lennie House, have agreed to a settlement against them for $16 million to resolve allegations of health care fraud, U.S. Attorney Kerry Harvey announced Thursday.

The settlement ends an investigation and False Claims Act litigation alleging that Nurses Registry, at the direction of House, fraudulently billed Medicare for medically unnecessary home health services, and services tainted by kickbacks provided by the company and House to local physicians and others who referred patients to Nurses Registry.

"For years, Nurses Registry abused its privileges as a provider in the Medicare program, and the trust of the medical community and general public," Harvey said in a statement. "This settlement returns ill-gotten gains to the Medicare Trust Fund and ensures that Nurses Registry will have no further opportunity to defraud federal health care programs.

"Our office will continue to vigorously pursue health care fraud in this district, against companies and individuals, no matter how difficult or protracted the litigation may be," Harvey said in the news release.

House, the CEO of Lexington-based Nurses Registry, died in February at age 72. Vicki House, his widow, has been acting president since his death. Nurses Registry filed for Chapter 11 bankruptcy protection in June.

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In a statement, Vicki House said, "Nurses Registry and Home Health is pleased to have finally reached a resolution of the litigation with the federal government. The settlement will eliminate a significant distraction and allow the company to focus all its time and attention on its sole objective: quality patient care."

Vicki House said she anticipates a sale of the company to "a strong corporate partner which will carry on Nurses Registry's 30-year reputation for compassionate care to it patients."

That sale could come as early as next week, said J. Guthrie True, the Frankfort attorney representing Nurses Registry in the federal litigation.

The government maintains that under Lennie House's direction, Nurses Registry engaged in systematic false billing that allowed the company to wrongfully obtain millions of dollars from the Medicare program between 2004 and 2011.

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Medicare pays for home health services only when a physician signs a plan of care certifying that the patient is home-bound and has a reasonable need for skilled nursing care or certain therapy services.

To advance its health care fraud, Nurses Registry falsified medical records to make it appear as if patients had a medical need for skilled nursing or therapy services, or appear as if the patients were home-bound, the news release said.

"At times, Nurses Registry employees even forged physician signatures on medical records to falsely 'certify' that the patient required Nurses Registry's services," the news release said.

In addition, Nurses Registry, at the direction of House, frequently recertified patients for more and more home health services — and billed such services to Medicare — long after the patient ceased to meet Medicare's eligibility requirements, the release said.

In addition to billing Medicare for unnecessary or non-reimbursable home health services, Nurses Registry and House provided tickets to athletic events and concerts, and provided other things of value, to doctors and referral sources to induce or reward patient referrals.

"This practice was so commonplace that physicians would contact the home health agency to ask for tickets to popular events, such as Taylor Swift concerts or the Kentucky Derby," Harvey said in the news release.

House also instructed the company's marketing employees to deliver bottles of liquor and other "enticements" to referral sources to ensure more valuable patient referrals that could be billed to Medicare.

These transactions violated the federal Anti-Kickback Statute and the Stark Law, which prohibits home health agencies from billing for services referred to them by physicians with whom they have a financial relationship.

"We are focused on combatting fraud in the home health arena," said Derrick L. Jackson, special agent in charge at the Atlanta office the U.S. Department of Health and Human Services office of inspector general. "Settlements like this one send a clear message that false claims to Medicare will not be tolerated."

The government filed a complaint against Nurses Registry and the Houses in September 2011, after an investigation into a whistleblower lawsuit filed by former employees Alisia Robinson-Hill and David Price.

After several years of litigation, the settlement, in conjunction with a previous settlement with Vicki House for $1,082,416, fully resolves that action in favor of the government.

Under the terms of the settlement agreement, Nurses Registry is to be sold to an independent third party within 90 days, and 70 percent of the net sale proceeds will be turned over to the federal government.

In addition, the estate of Lennie House will have one year to sell off all of its assets and will turn over 75 percent of those net sale proceeds to the government.

Those assets, according to a list filed in court with the settlement agreement, include a penthouse condo in Pompano Beach, Fla., valued at $307,040; three separate properties in Owen County totaling 960 acres with a total value of $965,000; a residential property and farm on Ironworks Pike in Scott County valued at $714,000; a gun collection valued at $635,349; jewelry, furnishings and paintings valued at $50,000; boats valued at $19,232; and vehicles valued at $34,294. Several other listed properties, some of which the estate is a 50 percent owner, are in Lexington, Georgetown and Cunningham, Tenn.

Under federal law, Robinson-Hill and Price, the whistleblowers, are to receive 15 to 20 percent of the settlement proceeds.

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